The central bank has proposed measures to reduce the possibilities of financial fraud in its discussion paper and feedback is open until May 8
For transactions exceeding ₹10,000, users would experience a lag of an hour, and the delay will be implemented on all transactions done from UPI, cards, net banking
For transactions worth ₹50,000 and above, the central bank suggests a 24-hour delay period for citizens aged 70 years and above
Amid an ongoing increase in digital financial theft, the Reserve Bank of India (RBI) has introduced a time lag for certain authorised push payments (APP) transfers at both the payer and payee ends as an effective fraud-mitigation measure.
In a discussion paper, “Exploring safeguards in digital payments to curb frauds”, the RBI has proposed various measures to control and reduce the possibilities of financial fraud in its discussion paper, which is open for comments and feedback until May 8.
The apex bank has suggested introducing a 1-hour delay for processing digital transactions worth ₹10,000 or more. This delay will be implemented on all merchant transactions done from UPI, cards, net banking, etc. However, recurring payments like e-mandates and payments made via cheques have been proposed to be exempted.
If implemented, the RBI foresees the delay to instil a “preventive control by disrupting the fraudster’s psychological influence over the victim and by giving the payer an opportunity to reconsider the transaction”.
Recognising that certain transactions may be time-sensitive, an option may be provided to the payer to override the lag for a specific transaction by explicitly authorising it, for instance through a whitelisting mechanism.
In such cases, the lag may be bypassed. Instead of allowing whitelisting of transactions or in addition to it, payees can be whitelisted by the payer. All payments to such whitelisted payees will not be subjected to time lag.
For APP transactions worth ₹50,000 and above, the central bank has also suggested a 24-hour delay period for processing transactions of citizens aged 70 years and above and persons. These “vulnerable” customers can appoint an additional authenticator (a trusted person) who can also oversee these types of transactions.
“The enhanced safeguard mechanism can be in the form of a “trusted person” designated by a vulnerable customer. This trusted individual acts as another layer of authentication for high- value transactions, say, those above ₹50,000,” the RBI said.
The RBI said that nearly 92% of the value of frauds reported in NCRP are above this age limit. Thus, the move will intend to balance operational efficiency for smaller transactions with robust protection for larger-value transfers.
With the longer waiting period, banks must clearly explain the associated risks to the customer before processing such requests, thereby ensuring informed decision-making.
For businesses, the RBI is considering prescribing a ceiling of ₹ 25 Lakh for annual aggregate credits into a bank account for which additional proof in support of genuine requirement of higher aggregate credit is not taken from the customer.
These measures, if implemented, would add on to the Central bank’s bid to safeguard the digital payments ecosystem. Important to highlight that the RBI released draft guidelines in March, for a compensation scheme to protect consumers from digital fraud, where aggrieved customers will be reimbursed up to 85% of their lost amount or ₹25,000whichever is lower.
Prior to that, RBI governor Sanjay Malhotra revealed that the central bank is developing an AI-powered fraud detection platform to flag suspicious online transactions, in October last year.
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